ECONOMY

Greece’s drachmas disappearing fast

More than half the total amount of drachmas has been withdrawn from circulation since January 1 and two in three transactions already take place in euros. According to two initial measurements, Greece has been among the most successful members of the eurozone in the ongoing introduction of notes and coins of the common currency. Bank of Greece governor Lucas Papademos, who is known for his moderation, says this is an important success. «Of course,» he adds, «the real national success is our membership of the eurozone.» There are three main reasons for the success of «Operation Euro.» The first, sentimental but nonetheless substantive, is the positive reception of the new currency by the public. The central bank recorded «the enthusiasm which led to strong demand» for the euro. Indeed, the euro progress index which the European Central Bank has drawn up to measure the substitution rate for national currencies, ranked Greece last Thursday in its top rank, with 61 percent against a 58 percent eurozone average. Only a week before the Greek index stood at just 50 percent. The second reason was the good preparation for the introduction. The Bank of Greece had supplied commercial banks with euros in good time, throughout the country and in very substantial amounts. Thus when the time came, banks had in their vaults the sum of 6 billion euros, which corresponded to 70 percent of the drachmas in circulation at the end of last year. In most eurozone members, the advance supply of euros was around 40 percent of total circulation. The third reason for the successful adaptation was the active involvement of commercial banks in the collective effort. The biggest success was that 92 percent of ATMs were operational in euros from the first day and 100 percent within the first week. The level of preparedness was equally good at bank counters, in supermarkets and in department stores. During the second half of last year, the central bank had trained about 6,000 bank cashiers who, in turn, trained a multitude of colleagues. Success has also been due to the relative ease with which the public overcame problems which had been considered difficult, such as the parity of 340.75 drachmas to the euro, the expected lines in banks and the familiarization of the public with the smaller denominations of the new currency. The changeover will be practically completed within the next two weeks. The payment of monthly wages in the new currency will deliver the coup de grace, particularly in the provinces, where the pace of introduction has been slower, and the drachma will have been withdrawn. It is expected that the present rate of withdrawal (about 70 billion drachmas a day) will continue. The central bank is prepared to respond, as the quantity of euros that has been printed is 60 percent larger than the drachmas that used to be in circulation. Moreover, since mid-December, the mint has been intensively churning out coins of 1 and 2 cents. The total quantity of coins will be triple that of drachma coins. Complaints received by the Hellenic Bank Association and commercial banks themselves have generally been limited and relatively insignificant. An important factor has been the work of bank staff themselves. Conversion coordinators note that the work involved in counting, control, service and explanations to customers has been much bigger than initially estimated. But the introduction was generally smooth throughout the eurozone. According to ECB, 8.1 billion euro notes had been placed in circulation by January 17, which represented more than 90 percent of the amount required to fully replace the national currencies.